Nations Financial Group, Inc. is a SEC-registered investment adviser with its principal place of business
located in Iowa. Nations Financial Group, Inc. began conducting business in 1999. We are considered a
fiduciary according to the Investment Advisors Act of 1940. As a fiduciary, it is our responsibility to
provide fair and full disclosure of all material facts and to act solely in the best interest of each of our
clients at all times.
We sponsor the NFGI Wrap Program (the "Program"), a wrap fee program. A wrap fee program is an
advisory program under which a specified fee or fees not based directly on transactions in the Client's
account is charged for advisory services, which includes portfolio management or advice on the selection
of investments, and the execution of Client transactions.
NFGI WRAP PROGRAM
The NFGI Wrap Program is a discretionary or non-discretionary, investment program in which your
Investment Adviser Representative (IAR) or Third-Party Manager provides a broad range of investment
recommendations based on your investment objectives, financial circumstances, best interest, and risk
tolerance. As a minimum criterion for providing these services, NFGI requires the Portfolio Managers to
possess satisfactory past business experience, plus any required industry examinations and registrations.
Most types of securities are eligible for purchase in the NFGI Wrap Program account including, but not
limited to, common and preferred stocks, exchange-traded products, closed end funds, fee-based unit
investment trusts, corporate and government bonds, certificates of deposit, options, structured products,
certain mutual funds whose shares can be purchased at net asset value, cash, variable annuities, and
certain wrap class alternative investments, such as REITs, hedge funds and managed futures.
Collectively, these are referred to as “Program Assets.”
Hedge funds and managed futures are not suitable for all investors. Hedge funds are complex investment
vehicles that often use leverage and other speculative investment practices, such as short sales, options,
derivatives, futures, and illiquid investments that may increase the risk of investment loss. Managed
futures are speculative investments that are subject to a significant amount of risk. This Brochure is not a
solicitation, recommendation, or invitation to invest in alternative investments and is intended solely to
disclose the availability of alternative investments within NFGI’s Wrap Program.
While new-issue CDs are an eligible Program Asset, the yield of new-issue CDs takes into account a
sales concession in order to compensate the brokerage firms that sell the CDs. For certain advisory
accounts, the underwriter retains this sales concession. The Firm’s Broker Dealer may retain the
concession, but the IAR does not receive the sales concession, the sales concession has an impact on
the overall yield paid to you. Since we charge an advisory fee on all eligible assets within an advisory
Account, you are effectively charged both the sales concession (retained by the underwriter) and the
advisory fee on the CD. These charges reduce the overall yield on the CD and, in some cases; this may
result in a negative yield. You should be aware that you could obtain the same CDs without being subject
to the advisory fee if you purchase it in a non-advisory brokerage Account.
The NFGI Wrap Program account may not be used for market timing strategies or similar activities for
mutual funds or any extreme trading activity that the Firm, in its sole discretion, deems detrimental to the
interest of average fund shareholders or contrary to the policies or interest of mutual fund companies with
whom the Firm, or Clearing Agent maintains relationships. The Firm or Clearing Agent, in its sole
direction, or by direction of the fund company, reserves the right to reject any transactions or to assess a
redemption fee for any partial or full liquidation execution in which the account trading appears to be
inconsistent with the fund’s prospectus. Furthermore, the Firm will cooperate, when asked by a fund
company, to aid in its attempt to identify and impede the efforts of the IAR and investors engaging in
market timing or extreme trading activity. If the fund company notifies the Firm to reject or cancel a trade
for any reason, NFGI reserves the right to cancel such trade without prior notice to the Client. The Firm
will not be held accountable for any losses resulting from market timing activities or any action taken
under its market timing policies. In addition, the frequency of mutual fund transactions and exchanges is
subject to any limits established by the applicable mutual funds and the Firm.
INDIVIDUAL PORTFOLIO MANAGEMENT
The IAR acts as the Portfolio Manager and provides continuous advice regarding the investment of your
funds based on your individual needs. Through personal discussions, goals and objectives based on your
particular circumstance are established, we identify your personal investment objective that is in your best
interest and create and manage a portfolio based on that objective. During our data-gathering process,
among other things we determine your individual objectives, time horizons, risk tolerance, and liquidity
needs. As appropriate, we also review and discuss your prior investment history.
We manage your funds on a discretionary or non-discretionary basis. Clients funds managed on a
discretionary basis: These portfolios are managed primarily by utilizing stocks, bonds, covered options,
variable annuity products, ETF’s and mutual funds. In discretionary accounts, the Investment Adviser
Representative (IAR) primarily makes all investment decisions with or without consulting you. This
discretion is only granted after receiving written approval from you via the contract. The IAR’s discretion
will solely relate to trading and will not allow the IAR to withdraw or journal your assets. Specific
investment recommendations will vary depending on the individual IAR that you are working with. Client
funds managed on a non-discretionary basis: These portfolios are managed primarily by utilizing stocks,
bonds, covered options, variable annuity products, ETF’s and mutual funds. The non-discretionary
accounts investment recommendations will be presented to you by the IAR; however, the final investment
decisions will be made by you. Specific investment recommendations will vary depending on the individual
IAR that you are working with.
Account recommendations are guided by but not limited to your stated objectives, risk tolerance, time
horizon, restrictions and guidelines, as well as tax considerations.
You may impose reasonable restrictions on investing in certain securities, types of securities, or industry
sectors.
Because some types of investments involve certain additional degrees of risk, they will only be
implemented/recommended when consistent with the Client's stated investment objectives, tolerance for
risk, liquidity and best interest.
Portfolio Managers may use third-party research to assist in developing your portfolio. When seeking to
anticipate trends and identify undervalued securities with sound fundamentals, Portfolio Managers may
also use a security selection and portfolio modeling process that incorporates fundamental, technical and
statistical analyses of historical data. Due to any number of factors, including timing of deposits,
investment selection process or investment needs, certain Clients may receive different execution prices
and investment results.
NFGI 401K PORTFOLIOS
We offer 5 portfolios to be used inside 401k’s, when we work in a discretionary manner under a 3(38)
arrangement. These mutual fund models are designed to fit the objectives of investors from Aggressive
(typically 100% equities) to Conservative (typically 20% equity/80% income).
These mutual fund models are built to have a diversified strategy. Internal expenses are considered in
these strategies. The portfolios may contain a large percentage in index funds to help keep the internal
expenses down. However, index funds may not be used at all times.
The sections below cover NFGI 401K Portfolios:
• NFGI Aggressive
• NFGI Moderate Aggressive
• NFGI Moderate
• NFGI Moderate Conservative
• NFGI Conservative
The NFGI Aggressive strategy is for investors who are characterized as seeking long-term capital
appreciation as their primary investment goal, with a long-term time horizon, little need for current income
and a higher risk tolerance allowing for the potential of considerable volatility and interim periods of
substantial loss of capital in exchange for potential higher longer-term returns. Risk levels are expected to
be consistent with a broadly diversified all-equity portfolio. With an emphasis on long-term capital
appreciation, exposures to small- to mid-cap and developed and emerging market international equities
could represent the majority of the overall asset allocation.
The NFGI Moderate Aggressive strategy is for investors that are characterized as seeking significant
growth of capital and income with a higher tolerance for risk. The dual mandate, greater risk tolerance and
longer-term time horizon allow these investors to pursue higher-risk and generally more aggressive
strategies that may offer higher potential returns. Diversified equities typically represent the majority of the
blend. In addition to seeking income through dividend-paying equities, and fixed income exposure is
generally maintained to enhance income yield and diversification
The NFGI Moderate strategy is for investors that are characterized as seeking both income and capital
appreciation while incurring moderate levels of risk. Investors seek to balance potential risk with their
goals for current income and moderate growth of capital. Based on these combined goals and risk
considerations, both diversified fixed income and equities will typically account for significant portions of
the overall asset allocation
The NFGI Moderate Conservative strategy is for investors that are characterized as having the dual
objectives of generating both capital appreciation and current income while maintaining risk levels that are
consistent with a more conservative investment approach. Based on overall risk considerations, these
investors seek growth of assets to meet financial goals and protect purchasing power, while, relative to
more aggressive mandates, maintaining safety of principal. As such, they are willing to accept lower
potential returns in exchange for lower risk. Based on the combined risk, return and yield objectives, the
asset allocation for these investors generally maintains the majority of assets in diversified fixed income
investments, but with a complementary allocation to broadly diversified domestic and international
equities.
The NFGI Conservative strategy is for investors that place emphasis on income generation versus
capital appreciation. While the growth of assets and the maintenance of purchasing power remain
considerations and are reflected in measured risk-taking, these objectives are constrained by both the
income-generation objective and a greater emphasis on maintaining safety of principal. Based on these
combined goals, these investors are expected to remain predominately invested in fixed income
investments, including relatively moderate allocations to high yield and emerging market bonds,
complemented by a moderate allocation to equities.
NFGI PORTFOLIOS
We offer portfolios to be used in a discretionary manner for Clients. These mutual funds, ETP, and equity
models are designed to fit the objectives of investors from Aggressive (up to 100% equities) to
Conservative (typically 30% equity/70% income). The Asset Allocation models are built to have a
diversified strategy. The Equity and Tactical models focus may not be on diversification but rather to a
primary investment goal or strategy.
NFGI Portfolios – Asset Allocation is a discretionary investment advisory program that offers a broad
array of mutual funds or ETPs that invest in and across different investment asset classes and employ
varied approaches to investment management. We have created a number of portfolios based on due
diligence and asset allocation that we believe are appropriate for a number of different investment
objectives. Based on your investment objectives, financial circumstances, and risk tolerance, your IAR
will recommend one of the models that will be managed on a discretionary basis.
The combination and allocation strategy of the selected mutual funds or ETPs in a Portfolio is based on
our determination of the appropriate target asset allocation and/or risk/return profile for your investment
objective and risk tolerance. The investments and allocations may be modified from time to time based
upon changes in asset allocation guidance or our assessment of factors impacting individual positions or
particular combinations. Additions to and withdrawals from your account will generally be allocated based
on the target allocation you selected.
Fluctuations in the market value of assets, as well as other factors, will affect the actual allocation at any
given time. We will generally rebalance the account annually unless market conditions indicate we should
do so more frequently. You may also request us to rebalance your account as necessary.
The sections below cover NFGI Portfolios – Asset Allocation:
o NFGI Aggressive (MF or ETP)
o NFGI Moderate Aggressive (MF or ETP)
o NFGI Moderate (MF or ETP)
o NFGI Conservative (MF or ETP)
NFGI Aggressive - Aggressive investors are characterized as seeking long-term capital
appreciation as their primary investment goal, with a long-term time horizon, little need for current
income and a higher risk tolerance allowing for the potential of considerable volatility and interim
periods of substantial loss of capital in exchange for potential higher longer-term returns. Risk
levels are expected to be consistent with a broadly diversified all-equity portfolio. With an emphasis
on long-term capital appreciation, exposures to small- to mid-cap and developed and emerging
market international equities will typically represent the majority of the overall asset allocation.
NFGI Moderate Aggressive - Moderate Aggressive investors are characterized as primarily
pursuing growth of principal and being willing to tolerate volatility consistent with the maintenance
of a primarily equity portfolio in pursuit of this objective. These investors do not need their portfolios
to provide current income but will look to non-equity exposure as a means to reduce risk and
further enhance diversification. Based on these objectives, the asset allocation for these investors
will remain predominately in diversified domestic and international equities, while relying on fixed
income securities to moderately temper the overall risk level. Within equities considerable
exposure will be maintained in asset classes with relatively higher longer-term growth potential,
including mid- and small-cap stocks and emerging markets.
NFGI Moderate - Moderate investors are characterized as seeking both income and capital
appreciation while incurring moderate levels of risk. Investors seek to balance potential risk with
their goals for current income and moderate growth of capital. Based on these combined goals and
risk considerations, both diversified fixed income and equities will typically account for significant
portions of the overall asset allocation
NFGI Conservative - Conservative investors are characterized as having the dual objectives of
generating both capital appreciation and current income while maintaining risk levels that are
consistent with a more conservative investment approach. Based on overall risk considerations,
these investors seek growth of assets to meet financial goals and protect purchasing power, while,
relative to more aggressive mandates, maintaining safety of principal. As such, they are willing to
accept lower potential returns in exchange for lower risk. Based on the combined risk, return and
yield objectives, the asset allocation for these investors generally maintains the majority of assets
in diversified fixed income investments, but with a complementary significant allocation to broadly
diversified domestic and international equities.
NFGI Portfolios - Equity and Tactical is a discretionary investment advisory program that offers a broad
array of mutual funds, ETPs, and individual equity positions that invest in and across different investment
asset classes and employ varied approaches to investment management. These strategies may not be
diversified and may have higher volatility than more diversified portfolios. Based on your investment
objectives, financial circumstances, and risk tolerance, your IAR will recommend one or more of the
models that will be managed on a discretionary basis.
The portfolios may be derived from outside research providers and the portfolios may materially be
modified. Additions to and withdrawals from your account will generally be allocated based on the target
allocation you selected.
Fluctuations in the market value of assets, as well as other factors, will affect the actual portfolio allocation
at any given time. These accounts may contain higher turnover levels and you should consider possible
tax consequences before investing in these strategies.
The sections below cover NFGI Portfolios – Equity:
o NFGI Value
o NFGI Equity Total Return
NFGI Value - The Value strategy uses the following criteria to select stocks to create a portfolio,
the criteria would include: Free Cash Flow levels, Net Profit Margin levels, Return on Equity levels,
Retained Earnings level, and Liquidity.
This strategy may not be diversified and will primarily be equities only. Investors should be
seeking long-term capital appreciation as their primary investment goal, with a long-term time
horizon, little need for current income and a higher risk tolerance allowing for the potential of
considerable volatility and interim periods of substantial loss of capital in exchange for potential
higher longer-term returns.
NFGI Equity Total Return - The strategy is designed for long-term total return and looks for
holdings that have a current yield at least equal to or greater than that of the S&P 500. The
company must not have cut its regular dividend in the last five years at the time of entry into the
model portfolio and that dividend must be secure based on our research.
This strategy may not be diversified and will primarily be equities only. Investors should be
seeking long-term capital appreciation as their primary investment goal, with a long-term time
horizon, little need for current income and a higher risk tolerance allowing for the potential of
considerable volatility and interim periods of substantial loss of capital in exchange for potential
higher longer-term returns.
The sections below cover NFGI Portfolios – Tactical:
o NFGI OTC Long/Short
o NFGI Interest Rate Long/Short
o NFGI Income
o NFGI Growth
o NFGI Total Return
NFGI OTC Long / Short - This strategy is designed for investors looking to potentially enhance
their portfolios investment performance. Based on our tactical research this strategy will use ETFs
that either can be invested in the Nasdaq 100, Treasury ETFs, Cash or an inverse of the Nasdaq
100.
This strategy is not diversified and will have higher levels of turnover which investors should
consider the tax implications. Investors should be seeking long-term capital appreciation as their
primary investment goal, with a long-term time horizon, little need for current income and a higher
risk tolerance allowing for the potential of considerable volatility and interim periods of substantial
loss of capital in exchange for potential higher longer-term returns.
NFGI Interest Rate Long / Short - This strategy is designed for investors looking to potentially
enhance their portfolios investment performance. Based on our tactical research this strategy will
either be invested in a Government Bond Fund, Cash or an inverse of Government Bond fund.
This strategy is not diversified and will have higher levels of turnover which investors should
consider the tax implications. Investors should be seeking long-term capital appreciation as their
primary investment goal, with a long-term time horizon, little need for current income and a higher
risk tolerance allowing for the potential of considerable volatility and interim periods of substantial
loss of capital in exchange for potential higher longer-term returns.
NFGI Income Portfolio - This strategy is designed for investors that want to participate in active
management investment strategies inside of income-oriented sectors. Our research looks at using
market and economic data with the performance of the financial markets to identify investment
opportunities throughout the different sectors of Income investing.
This strategy is not diversified and will have higher levels of turnover which investors should
consider the tax implications. Investors should be seeking long-term capital appreciation as their
primary investment goal, with a long-term time horizon and a higher risk tolerance allowing for the
potential of considerable volatility and interim periods of substantial loss of capital in exchange for
potential higher longer-term returns.
NFGI Growth Portfolio – This strategy is designed for investors that want to participate in active
management investment strategies with inside of all equity and income sectors. Our research
looks at using market and economic data with the performance of the financial markets to identify
investment opportunities throughout the different sectors of Income investing.
This strategy is not diversified and will have higher levels of turnover which investors should
consider the tax implications. Investors should be seeking long-term capital appreciation as their
primary investment goal, with a long-term time horizon and a higher risk tolerance allowing for the
potential of considerable volatility and interim periods of substantial loss of capital in exchange for
potential higher longer-term returns.
NFGI Total Return Portfolio – This strategy is designed for investors that want to participate in
active management investment strategies with inside of all equity and income sectors to react to
changes in the markets to reduce risk. Our research looks at using market and economic data with
the performance of the financial markets to identify investment opportunities throughout the
different sectors of Income investing.
This strategy is not diversified and will have higher levels of turnover which investors should
consider the tax implications. Investors should be seeking long-term capital appreciation as their
primary investment goal, with a long-term time horizon and a higher risk tolerance allowing for the
potential of considerable volatility and interim periods of substantial loss of capital in exchange for
potential higher longer-term returns.
NFGI WRAP PROGRAM FEE SCHEDULE
NFGI Wrap Program accounts are charged an all-inclusive fee that covers advisory, execution and
reporting services. Billed quarterly in advance, the standard NFGI Wrap Program, fee schedule is based
on program eligible assets:
Total Account Value Annualized Fee
All Assets 2.50%*
*NFGI’s 401K Portfolios offered as a 3(38) manager the fees will range from .10-.30%
*Discounts and tiers may be applied by the Investment Adviser Representatives (IARs)
Fees for advisory services are negotiable, thus vary from Client to Client. The fees you pay for advisory
services will vary based on a number of factors including but not limited to; the specific IAR that is
providing the service, the geographic location of the Client and IAR, the types of securities being
managed, the account size, special service requests you may have and specific account related service
requests of the Client.
Whereas we do not generally waiver from these fee schedules, we reserve the right to charge you a
higher or lower fee or one different from the guidelines set forth in these fee schedules and one lower or
higher than fees charged to another client with a similar account.
A portion of the fees will be paid to your IAR in connection with the introduction of Accounts as well as for
providing Client-related services. This compensation could be more or less than an IAR would receive if
you paid separately for investment advice, brokerage, and other services. If an IAR wishes to discount
Fee below certain levels, they have the ability to do so under certain circumstances. IAR’s generally will
earn reduced compensation resulting from the discount. This creates an incentive for IAR’s to not
discount.
The specific asset-based fees are documented in the advisory contract and/or fee schedule that you sign
prior to providing services.
Fees will be applied to cash sweep balances and cash alternatives (i.e., money market funds) held inside
the Account. Clients will, in many instances, pay more in fees with respect to sweep vehicle holdings, than
the interest earnings that may be generated by these sweep vehicle holdings.
Accounts may hold assets that are considered non-billable or below the line. These may include assets
held away but shadow posted in the account or certain mutual funds that have yet to convert to an
advisory or lower cost share class, and various other situations.
NFGI believes its advisory services are competitively priced, however you may be able to receive similar
services at a lower price elsewhere. Fees for consulting services will vary according to each IAR and their
services provided.
Certain fee discounts may be provided to friends and family members of the IAR.
In addition to sponsoring this wrap fee program, NFGI has entered into an agreement with Wells Fargo
Advisors (“WFA”), pursuant to which WFA provides advisory and/or other services with respect to the
Programs. Clients with advisory accounts described herein are Clients of NFGI. NFGI is not related to or
affiliated with WFA or Wells Fargo Clearing Services (the “Clearing Agent”). Unless otherwise specified,
the Clearing Agent will maintain custody of Client assets. Clearing Agent qualifies as a “qualified
custodian” as described by Rule 206(4)-2 of the Investment Advisers Act. WFA and Clearing Agent each
reserves the right to reject and not provide services to any Client or with respect to any Client account for
any reason.
WFA provides advisory and other services to NFGI with respect to the following programs: Personalized
UMA, Fundsource, and Fundsource Fundamentals. Please review the appropriate WFA Disclosure
Documents for a complete description of each program. The fees for these programs should not exceed
2.5%.
WFA does not provide advisory services to NFGI with respect to Private Investment Management (PIM),
Private Advisor Network (PAN), Asset Advisor, and CustomChoice. NFGI provides advice to client
regarding the selection of advisory programs, WFA provides certain non-advisory services (such as:
custody, execution services, billing and reporting) which enable NFGI to offer these programs.
Private Investment Management (“PIM”)
With PIM, our IARs (called Portfolio Managers) provide investment advisory and brokerage services to
your account on a discretionary basis. As a minimum criterion for providing advisory services, NFGI
requires our Portfolio Managers to possess satisfactory past business experience, plus any required
industry examinations and registrations. Based on your investment objectives and individual needs, your
Portfolio Manager will have discretion to manage your assets to an appropriate investment strategy.
Portfolio Managers may use third-party research to assist in developing security selection models for PIM.
When seeking to anticipate trends and identify undervalued securities with sound fundamentals, Portfolio
Managers may also use a security selection and portfolio modeling process that incorporates
fundamental, technical and statistical analyses of historical data. Due to any number of factors, including
timing of deposits, investment selection process or investment needs, certain Clients may receive different
execution prices and investment results.
Annual fees charged under these programs are billed quarterly in advance and are deducted directly from
your accounts pursuant to the PIM ADV. When fees are negotiable, the negotiating factors include the
complexity of your financial situation, securities positions held in the account, and the amount of assets
under management.
After 120 annual trades in your PIM wrap accounts, your IAR will be assessed an elevated internal
administration fee (not paid by you), which is a conflict not to make trades in your account.
The maximum annual fee charged in PIM equity and fixed income accounts shall not exceed 2.50%
annually. Fees charged on accounts are negotiable.
Whereas we do not generally waiver from these fee schedules, we reserve the right to charge you a
higher or lower fee or one different from the guidelines set forth in these fee schedules and one lower or
higher than fees charged to another client with a similar account.
A portion of the fees will be paid to your IAR in connection with the introduction of Accounts as well as for
providing Client-related services. This compensation could be more or less than an IAR would receive if
you paid separately for investment advice, brokerage, and other services. If an IAR wishes to discount
Fee below certain levels, they have the ability to do so under certain circumstances. IAR’s generally will
earn reduced compensation resulting from the discount. This creates an incentive for IAR’s to not
discount.
Private Advisor Network
Through Private Advisor Network (“PAN”), our IAR will assist you in identifying an outside investment
adviser to perform investment advisory services with respect to your assets. NFGI’s services include
matching personal and financial data provided by you with a roster of investment advisers, periodic
evaluation and comparison of account performance, and continuing investment performance and
objectives.
Your IAR will provide information on investment advisers that appear to meet your
needs. Screening
criteria may include the investment adviser’s past record, management style, location, size of account,
etc. With the assistance of your IAR, you may then choose one or more investment advisers to manage
your assets.
All accounts are managed by the outside investment adviser(s) selected by you. Neither NFGI nor WFA
has discretionary trading authority with respect to such accounts. Information collected by NFGI
regarding PAN advisers is believed to be reliable and accurate but NFGI does not necessarily
independently verify it on all occasions. NFGI does not assume responsibility for the conduct of
investment advisers that Clients select, including their performance or compliance with laws or
regulations.
Private Advisor Network accounts are charged an all-inclusive fee that covers, advisory, execution,
custodial and reporting services. Billed quarterly in advance, the standard Private Advisor Network fee
schedule is based on program eligible assets. The Fee Schedule does not include the investment adviser
fees of the third-party investment manager. You pay for the services of the investment adviser separately.
You authorize us to pay the separate investment advisory management fee invoiced by the adviser by
debiting the Client account accordingly. It is your responsibility to determine if any such invoice from the
investment adviser is proper or if the amount of fees charged is accurate. You may revoke NFGIs
authorization to pay the investment adviser fee at any time by written notice.
After 120 annual trades in your PAN wrap accounts, your IAR will be assessed an elevated internal
administration fee (not paid by you), which is a conflict not to make trades in your account.
The annualized fee charged under the Private Advisor Network typically ranges from 1.00% to 2.00% for
equity and balanced accounts and 0.50% to 1.00% for fixed income accounts with fees being negotiable
on accounts above $2,000,000. Fees charged by outside investment advisers selected are billed and
collected separately from the annual fee retained by us.
The total fee should not exceed 2.50%
Whereas we do not generally waiver from these fee schedules, we reserve the right to charge you a
higher or lower fee or one different from the guidelines set forth in these fee schedules and one lower or
higher than fees charged to another client with a similar account.
A portion of the fees will be paid to your IAR in connection with the introduction of Accounts as well as for
providing Client-related services. This compensation could be more or less than an IAR would receive if
you paid separately for investment advice, brokerage, and other services. If an IAR wishes to discount
Fee below certain levels, they have the ability to do so under certain circumstances. IAR’s generally will
earn reduced compensation resulting from the discount. This creates an incentive for IAR’s to not
discount.
Asset Advisor and CustomChoice
With Asset Advisor and CustomChoice, our IARs (called Portfolio Managers) provide investment advisory
and brokerage services to your account on a non-discretionary basis. As a minimum criterion for
providing advisory services, NFGI requires our Portfolio Managers to possess satisfactory past business
experience, plus any required industry examinations and registrations. Based on your investment
objectives and individual needs, your Portfolio Manager will recommend an appropriate investment
strategy.
Portfolio Managers may use third-party research to assist in developing security selection models for
Asset Advisor and CustomChoice. When seeking to anticipate trends and identify undervalued securities
with sound fundamentals, Portfolio Managers may also use a security selection and portfolio modeling
process that incorporates fundamental, technical and statistical analyses of historical data. Due to any
number of factors, including timing of deposits, investment selection process or investment needs, certain
Clients may receive different execution prices and investment results.
Annual fees charged under these programs are billed quarterly in advance and are deducted directly from
your accounts pursuant to the Asset Advisor and CustomChoice ADV. When fees are negotiable, the
negotiating factors include the complexity of your financial situation, securities positions held in the
account, and the amount of assets under management.
After 120 annual trades in your Asset Advisor and CustomChoice wrap accounts, your IAR will be
assessed an elevated internal administration fee (not paid by you), which is a conflict not to make trades
in your account.
The maximum annual fee charged in Asset Advisor accounts shall not exceed 2.50% annually. Fees
charged on accounts are negotiable.
The standard fee schedule under the Custom Choice Program is as follows:
• First $250,000 of assets – 1.75%
• Next $750,000 of assets – 1.50%
• Over $1,000,000 of assets – 1.15%
Whereas we do not generally waiver from these fee schedules, we reserve the right to charge you a
higher or lower fee or one different from the guidelines set forth in these fee schedules and one lower or
higher than fees charged to another client with a similar account.
A portion of the fees will be paid to your IAR in connection with the introduction of Accounts as well as for
providing Client-related services. This compensation could be more or less than a IAR would receive if
you paid separately for investment advice, brokerage, and other services. If an IAR wishes to discount
Fee below certain levels, they have the ability to do so under certain circumstances. IAR’s generally will
earn reduced compensation resulting from the discount. This creates an incentive for IAR’s to not
discount.
___________________________________________________________________________
HOW FEES ARE CHARGED
Asset Based - You will pay NFGI for its services and for the services of your IAR in advance on a
quarterly basis, or as otherwise agreed upon between the parties and stated in the fee schedule. The
initial fee will be immediately charged once the account is under agreement and funded. The fee will be
prorated for the number of days in the partial quarter the account is under agreement by using the
opening balance. Thereafter all account’s quarterly fees will be charged in advance during the first month
of the quarter and will be based on the ending account balance of the prior quarter. NFGI’s fee will be
debited from the account on payment date which is on or about the fifteenth business day of the month.
Should you make a deposit or withdrawal during any quarter, the account may be charged or credited
back a partial advisory fee. To determine whether a partial fee is applicable (generally on the 3rd week of
the month); the net additions/withdrawals from the prior month are used to calculate a prorated fee on the
amount. Should the prorated fee be a positive or negative $40 or more, it will be debited from or credited
to the account. Generally, deposits to accounts can increase fees charged and withdrawals from an
account can reduce fees paid.
Fee schedules may be amended from time to time by NFGI upon thirty (30) days written notice to you.
Any fee schedule charges previously in effect shall continue until the next billing cycle.
You may pay the aforementioned fees from outside funds provided that your IAR is notified in advance
and outside funds are sufficient to pay the fees are paid to NFGI on or prior to payment date. You
authorize NFGI to request a withdrawal of fees from the account. You will be notified of the quarterly fee
on the statement that comes from the account custodian.
In some cases, the account value in which the fee is based may differ from the statement value on the
custodian issued statement. This will generally occur in instances where the account has accrued interest
or dividends past ex-date that have yet to post to the account.
For eligible securities purchased previously in a brokerage account and subsequently moved into an
advisory account, these securities will be included in the calculation of fees for services and are in
addition to any previous brokerage charges paid.
Accounts may hold assets that are considered non-billable or below the line. These may include assets
held away but shadow posted in the account or certain mutual funds that have yet to convert to an
advisory or lower cost share class, and various other situations.
You should be aware that program fees charged may be higher or lower than those otherwise available if
you were to select a separate brokerage service and negotiate commissions in the absence of the extra
advisory service provided.
You should consider the value of these advisory services when making such comparisons. The
combination of custodial, advisory and brokerage services may not be available separately or may require
multiple accounts, documentation, and fees. You should also consider the amount of anticipated trading
activity when selecting among the programs and assessing the overall cost. Advisory programs typically
assume a normal amount of trading activity and, therefore, under particular circumstances, prolonged
periods of inactivity or asset allocations with significant fixed income or cash weightings may result in
higher fees than if commissions were paid separately for each transaction.
A portion of the fees or commissions charged for the programs described here will be paid to the IARs in
connection with the introduction of accounts as well as for providing Client-related services within the
programs. This compensation may be more or less than an IAR would receive if you paid separately for
investment advice, brokerage, and other services, and may vary, depending on the program or services
offered.
In an advisory Account, you pay fees based on the percentage of assets in your Account in accordance
with an investment advisory agreement. Certain services or products have higher total fees than others
based on a number of factors including, but not limited to, management fees, and administrative fees. A
conflict of interest exists to the extent that we have a financial incentive to recommend a particular
advisory Program that results in additional or greater compensation to us.
Should you have a question about your quarterly fee you should contact NFGI at 1-800-351-2471.
Account Termination
Client signed agreements shall remain in full force and effect until NFGI receives written notice from you
of its termination or until NFGI receives notice from the court or legally appointed person(s) in case of the
Client's death or adjudicated incompetence. You have the right, within five (5) days of execution, to
terminate the Client Agreement without penalty. NFGI and the IAR can also terminate the agreement with
written notice to the Client. In the event of cancellation of Client Agreements, fees previously paid
pursuant to the fee schedule will be refunded on a pro rata basis, as of the date notice of such
cancellation is received by the non-canceling party, less reasonable start-up costs.
If you choose to terminate your advisory agreement, we can liquidate your account if you instruct us to do
so before removal from any program. If so instructed, we will liquidate your account in an orderly and
efficient manner. We do not charge for such redemption; however, you should be aware that certain
mutual funds impose redemption fees as stated in their fund prospectus. Any trade instructions given after
termination of the agreement will be subject to applicable brokerage expenses like commissions. You
should also keep in mind that the decision to liquidate security issues or mutual funds may result in tax
consequences that should be discussed with your tax advisor.
We will not be responsible for market fluctuations in your account from the time of notice until complete
liquidation. All efforts will be made to process the termination in an efficient and timely manner. Factors
that may affect the orderly and efficient liquidation of an account might be size and types of issues,
liquidity of the markets, and market makers' abilities. Should the necessary securities' markets be
unavailable, and trading suspended, efforts to trade will be done as soon as possible following their
reopening. Due to the administrative processing time needed to terminate an advisory account,
termination orders cannot be considered market orders. It may take several business days under normal
market conditions to process your request.
If an advisory agreement is terminated, but you maintain a brokerage account with us, your mutual fund
shares may be exchanged for shares of another series of the same fund since they may no longer be
eligible for the share class they are in. You are subject to the customary brokerage charges for any
securities positions purchased or sold in your account after the termination of program services.
GENERAL INFORMATION
Product Fees (mutual funds / ETPs): All fees paid to NFGI for investment advisory services are
separate and distinct from the fees and expenses charged by money markets, mutual funds and/or ETPs
to their shareholders. These fees and expenses are described in each fund's prospectus. These fees
generally include a management fee, other fund expenses, and a possible distribution fee. If the fund also
imposes sales charges, you may pay an initial or deferred sales charge. You could invest in a money
market, mutual fund directly, without our services. In that case, you would not receive the services
provided by our firm which are designed, among other things, to assist you in determining which money
market, mutual fund or ETPs are most appropriate to your financial condition and objectives. Accordingly,
you should review both the fees charged by the funds and our fees to fully understand the total amount of
fees to be paid by you and to thereby evaluate the advisory services being provided.
Certain funds make multiple no-load, institutional, advisory, or load-waived share classes available for
purchase through investment advisory programs. These share classes may be available only through
NFGI wrap programs and have different and lower shareholder servicing, sub-accounting, investment
management and 12b-1 fees and charges from other shares classes offered by those Funds. As a result,
some Clients may have purchased these lower-cost institutional share classes, while others may have
purchased a non-institutional share class.
IAR’s have the availability to utilize mutual funds that offer various share classes, including those within
the same fund. Varying share classes include but are not limited to shares designated as Class A Shares
and Class I Shares. Generally, I Shares are reserved for institutional investors and therefore are not
always available for your account. As a result of the different expenses of the mutual fund share classes,
it is generally more expensive for you to own Class A Shares than Class I Shares (or other share
classes).
You generally do not pay a transaction charge for Class A or C Share mutual fund transactions; however,
the share class can be more expensive to you over time because of the ongoing 12b-1 fee. You should
discuss and understand these additional indirect expenses borne as a result of the mutual fund fees.
NFGI or our service providers will collect such fees directly or indirectly from some or all of the mutual
funds in which you invest, and we may pay any such fees it receives to NFGI IARs if they were accrued
while the position was not in our advisory program. The amount of the fees we or your IAR receive will
vary, depending on the percentage paid pursuant to a fund's Rule 12b-1 plan.
Most of the mutual funds we include on our advisory program platform do not pay us 12b-1 fees. Any 12b-
1 fee payments we do receive for program approved eligible mutual funds held in advisory accounts are
credited back to the account. 12b-1 fees received from non-eligible mutual funds will not be credited back
to the account. These fees will be shared with the IAR. Receipt of the fees creates a conflict. Ineligible
positions may be held in the account but will not be included in advisory billing. NFGI monitors all
transactions to help ensure the appropriate shares classes are offered. In addition, periodic position
reviews are completed to ensure funds paying 12b-1 are not charged an advisory fee.
Third Party Management Fees: Clients participating in separately managed account programs will be
charged various program fees in addition to the advisory fee charged by our firm. Such fees may include
the investment advisory fees of the independent advisers, which may be charged as part of a wrap fee
arrangement. In a wrap fee arrangement, you pay a single fee for advisory, brokerage and custodial
services. The portfolio transactions will be executed without commission charges in a wrap fee
arrangement. In evaluating such an arrangement, you should also consider that, depending upon the level
of the wrap fee charged by the firm, the amount of portfolio activity in the account, and other factors, the
wrap fee may or may not exceed the aggregate cost of such services if they were to be provided
separately. We will review with Clients any separate program fees that may be charged.
Additional Fees and Expenses: In addition to our advisory fees, Clients are also responsible for the fees
and expenses charged by custodians and imposed by broker dealers, including, but not limited to,
custodial annual account or product fees and any transaction charges imposed by a broker dealer with
which an independent investment manager effects transactions for the account(s).
The fee does not include certain dealer markups or markdowns, odd lot differentials, transfer taxes,
exchange fees, execution fees (foreign and/or domestic) when applicable, fees for trades executed away
from the custodian, and any other fees required by law.
Fees will be applied to cash sweep balances and cash alternatives (i.e., money market funds) held inside
the Account. Clients will, in many instances, pay more in fees with respect to sweep vehicle holdings, than
the interest earnings that may be generated by these sweep vehicle holdings.
Cash balances in an Account will be invested in a cash sweep program. In a low interest rate
environment, the yield that you earn on cash and cash alternatives, including cash sweep funds, CDs and
money market funds may not offset advisory fees. In some instances, the effective yield of the investment
may in fact be negative. NFGI receives compensation for assets in the cash sweep program and that
creates a conflict of interest. See more in Item 9 below.
Non-brokerage-related fees, such as IRA fees, are not included in the wrap fee and may be charged to
your account separately. As more fully described in the fee schedules above, the fees you are charged
may be different, depending on the asset type invested by the account.
Your IAR may suggest that you use other products and services that NFGI offers, but that are not
available through the program you select (“Excluded Assets”). Excluded Assets are not charged a
program fee and are not considered a part of the program or program services. We generally recommend
that you hold these Excluded Assets in a separate brokerage account. If an excluded fund purchased for
or transferred into your account later becomes eligible for the program, program fees will apply to that
fund. You will incur any usual and customary brokerage charges and fees imposed on transactions in
Excluded Assets which may include (i) any dealer markups and odd lot differentials and transfer taxes; (ii)
charges imposed by broker-dealers and custodians other than WFA and its affiliates and fees for other
products and services that we and our affiliates may offer; (iii) offering discounts, commissions and related
fees in connection with underwritten public offerings of securities; (iv) margin interest and operational fees
and charges; (v) IRA fees; and (vi) any redemption fees, exchange fees and or similar fees (among which
SEC fees are included) imposed in connection with mutual fund transactions whereby NFGI or your IAR
may receive additional compensation on these Excluded Assets.
ERISA Accounts: In some instances, NFGI will be deemed to be a fiduciary to advisory Clients that are
employee benefit plans pursuant to the Employee Retirement Income and Securities Act and the Internal
Revenue Code that include among other things, restrictions concerning certain forms of compensation. To
avoid engaging in prohibited transactions, NFGI will only charge fees for investment advice about
products for which our firm and/or our related persons do not receive any commissions or 12b-1 fees, or
conversely, investment advice about products for which our firm and/or our related persons receive
commissions or 12b-1 fees, however, only when such fees are used to offset NFGI's advisory fees.
Advisory Fees in General: Clients should note that similar advisory services may (may not) be available
from other registered (or unregistered) investment advisers for similar or lower fees. You could also invest
on your own in a security or a portfolio directly without being charged an investment advisory fee for
services. You should be aware that investment advisory program fees charged may be higher or lower
than if you elected to execute transactions on a commission basis for each transaction in a brokerage
account. You should consider the value of these investment advisory services when making such
comparisons. The combination of custodial, investment advisory and brokerage services may not be
available separately or would require maintaining multiple accounts, documentation, and fees. You
should also consider the amount of anticipated volume of trading activity when selecting among the
investment advisory programs when assessing the overall costs. Investment advisory programs typically
take into consideration certain volume of trading activity and therefore, under particular circumstances,
prolonged periods of inactivity or asset allocations with significant fixed income or cash positions may
result in higher investment advisory fees being paid overtime than if you paid a commission separately for
each transaction.
Limited Prepayment of Fees: Under no circumstances do we require or solicit payment of fees in excess
of $1200 more than six months in advance of services rendered.
Changes in Fee Schedules: All fees are subject to change with 30 days written notice to the Client(s).
Changes in fee rates are generally not applied until the next billing cycle.
Risk in the Use of Margin: To the extent margin is used in your account, you should be aware that the
margin debit balance does not reduce the market value of eligible program assets. If you use margin to
purchase additional securities, your total value of eligible program assets increases and therefore your
asset-based fee will increase. In addition, you will be charged margin interest on the debit balance in your
account.
The increased asset-based fee that you pay will provide an incentive for your IAR to recommend the use
of margin. However, we intend to make all recommendations independent of such considerations and
based solely on our obligations to act in your best interest and consider your objectives and needs.
Please note that using margin is not suitable for all investors; the use of margin increases leverage in your
account and therefore increases its risk. Additionally, if margin is used in your account, the firm may
receive additional compensation. The IAR will not share in this compensation but NFGI does set the
margin rate, so this is an additional conflict. Please see the Margin Disclosure Statement and the General
Account Agreement and Disclosure Document provided at the time establishing margin for more details
on the risks of margin use.
You may pledge your account assets as collateral for WFCS’ non-purpose loan program with our consent
and where you are eligible under the program. In order for your account to be eligible to serve as
collateral for a securities-backed loan, your account may not also serve as collateral for a margin loan. If
you wish to use your account as collateral for a securities-based loan, we will automatically discontinue
the availability of margin for your account. There are risks, costs, and conflicts of interests associated with
securities-based loans. You are encouraged to speak with your IAR to the extent you have questions
about how your account may be used in connection with a securities- based loan program and how such
arrangement should be taken into consideration when discussing the management of your account.
If you have elected to participate in the securities-based loan program, the terms and conditions
applicable to that program are governed by the applicable securities-based loan documents and other
service agreements and are not included or described further in this brochure. You should review carefully
the terms, conditions and any related risk disclosures for the program and understand that risks are
heightened in the event you hold a concentrated position in your pledged account or if your pledged
account makes up all, or substantially all, of your overall net worth or investable assets. Certain eligibility
requirements must be met and documentation must be completed prior to obtaining securities-based
loans.
NFGI sets the interest rate for these programs, which is a conflict for us to recommend these programs.
The costs, including interest, associated with a securities-based loan are not included in the Fee and will
result in additional compensation to us and our IAR. The interest charges on your securities-based loan
program, combined with the Fee, may exceed the income generated by your pledged account assets and,
as a result, the value of your account may decrease. You are encouraged to carefully consider the total
cost of taking out a securities-based loan, and any additional compensation that NFGI and your IAR will
receive, when determining to take out and/or maintain a securities-based loan against your account
assets.
In addition to receiving a portion of the Fee, IAR’s also receive compensation based on the outstanding
loan balances of securities-based loan programs. Since NFGI and your IAR are compensated through
asset-based advisory fees paid on your account, we benefit if you draw down on your securities-based
loan, which preserves asset based advisory fee revenue and generates additional loan-related
compensation, rather than sell securities or other investments in your account, which would reduce the
assets in your account and our asset-based advisory fee revenue. This presents a conflict of interest for
your IAR when addressing your liquidity needs. In addition, where a securities-based loan is secured by
both brokerage and advisory assets, an IAR will benefit if your brokerage assets are liquidated prior to or
instead of your advisory assets because the IAR would be able to maintain advisory account assets
subject to the Fee. We address these conflicts by disclosing them to you and monitoring IAR trading
activities and program balances. Also, by making all recommendations independent of such
considerations and based solely on your best interest and our obligations to consider your objectives and
needs.
There are other lending products that may be suitable for you and for which we and your IAR would
receive different or no compensation. You are responsible for independently evaluating if a securities-
based loan is appropriate for your needs, if the lending terms are acceptable, and whether the securities-
based loan will have potential adverse tax or other consequences for you.
Except for margin accounts, where the loan proceeds can be used to purchase, carry, or trade securities,
the proceeds of securities-based loan may not be used to (a) purchase, carry, or trade securities or (b)
reduce or retire any indebtedness incurred to purchase, carry, or trade securities. If your account is used
as collateral for a securities-based loan, the account is pledged to support the loan and you are not
permitted to withdraw funds or other assets from your account unless sufficient amounts of collateral
remain to continue supporting the securities-based loan (as determined under the applicable Securities-
Based Loan Program). Although you are required to satisfy such collateral requirements, you can
terminate your advisory relationship with NFGI, at which time the funds and assets in your account will be
treated as a brokerage account and the collateral requirements for the securities-based loan will continue
to apply.
Additional Considerations Associated with Pledging Advisory Accounts: In addition to the risks
mentioned above, with respect to investment advisory account(s) that are pledged or otherwise used as
collateral for margin or any other securities-based lending product, the exercise of our rights and powers
over the assets in your advisory account(s), including the disposition and sale of any and all assets
pledged as collateral may be contrary to your interests and the investment objective of your advisory
account(s). Any recommendation to use margin or a securities-based lending product, as well as the
related compensation that we or our affiliate may receive, could create conflicts of interest between you
and us or, if applicable, our affiliate. For example, such recommendation to use margin or a securities-
based lending product could result in a situation in which we are required to liquidate securities your IAR
or money manager would otherwise not sell, and which may not otherwise be in your best interests to sell,
to satisfy a maintenance call. We or a third-party money manager will seek to manage your advisory
account(s) as agreed under your advisory client agreement and applicable client profile provided that, if a
maintenance call takes place, we or your money manager may not be able to manage your advisory
account(s) consistent with our or the money manager’s overall strategy. Any action taken by us, or an
affiliate, against the assets in your advisory account(s) pursuant to the use of margin or a securities-based
lending product will not constitute a breach of our fiduciary duties as an investment advisor to you under
your advisory client agreement and applicable client profile.